Hertz 2009 Annual Report Download - page 127

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board, or ‘‘FASB,’’ issued The FASB Accounting
Standards Codification. The Codification became the source of authoritative GAAP recognized by the
FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On July 1,
2009, the Codification superseded all then-existing non-SEC accounting and reporting standards. All
other nongrandfathered non-SEC accounting literature not included in the Codification became
nonauthoritative.
Under ASC 470-20, ‘‘Debt with Conversion and Other Options’’, or ‘‘ASC 470-20,’’ cash settled
convertible securities are separated into their debt and equity components. The value assigned to the
debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without
the conversion feature, and the difference between the proceeds for the convertible debt and the amount
reflected as a debt liability is recorded as additional paid-in capital. As a result, the debt is recorded at a
discount reflecting its below market coupon interest rate. The debt is subsequently accreted to its par
value over its expected life, with the rate of interest that reflects the market rate at issuance being
reflected on the consolidated statements of operations. We applied the provisions of ASC 470-20 to the
Convertible Debt Public Offering. See Note 3—Debt.
In January 2009, the FASB issued guidance which contains amendments to ASC 715, ‘‘Compensation—
Retirement Benefits’’ that are intended to enhance the transparency surrounding the types of assets and
associated risks in an employer’s defined benefit pension or other postretirement plan. These particular
amendments became effective for us beginning with this annual report and did not have a material
impact on our financial position or results of operations. See Note 4—Employee Retirement Benefits.
In June 2009, the FASB issued guidance relating to how a company determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated.
The determination of whether a company is required to consolidate an entity is based on, among other
things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that
most significantly impact the entity’s economic performance. These provisions became effective for us
on January 1, 2010, and it did not have a material impact on our financial position or results of
operations.
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